Today the ASX-listed company blamed the “consolidation of hosting services” by partners for customer churn and poor performance by the enterprise services division in the six months to 30 June, 2011.

Melbourne IT chief executive officer and managing director Theo Hnarakis explained that some telco partners had begun offering hosted services from their own data centres.

“We built the [enterprise services] model on basically an indirect [sales] model with the telcos,” he said. “We are seeing some of the telcos bring some of those services in-house.”

Hnarakis said Melbourne IT's partner relationships remained “healthy”, but it was preparing to “go direct to market, rather than suck on the teat of telcos going forward”.

He said the company had reorganised its sales and account management team in the half-year to build a direct sales capability.

The reorganisation included the appointment of Peter Wright – formerly of Optus, Alphawest, Telstra and Qantas – as head of enterprise services in February.

Melbourne IT’s enterprise services division today announced a half-year revenue of $13.2 million to 30 June, down 24 percent on the year prior.

The division’s earnings before interest and taxes (EBIT) fell 75 percent in the period to $0.4 million.

It suffered the largest fall in revenue across all Melbourne IT’s business units, and contributed to an 11 percent fall in overall revenue and 30 percent decrease in EBIT (pdf).

A strong Australian dollar, subdued economic climate overseas, absence of large contracts and ongoing costs of a $25 million IT transformation project also contributed to what Hnarakis described as a “disappointing” result.

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